Last week, you might have seen that Ceridian HCM Holding Inc. (NYSE:CDAY) released its full-year result to the market. The early response was not positive, with shares down 8.7% to US$66.91 in the past week. Revenues of US$824m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.53, missing estimates by 5.4%. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
After the latest results, the 15 analysts covering Ceridian HCM Holding are now predicting revenues of US$908.4m in 2020. If met, this would reflect a meaningful 10% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 53% to US$0.26 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$928.8m and earnings per share (EPS) of US$0.43 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
Analysts made no major changes to their price target of US$72.31, suggesting the downgrades are not expected to have a long-term impact on Ceridian HCM Holding's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Ceridian HCM Holding at US$87.00 per share, while the most bearish prices it at US$43.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Ceridian HCM Holding's performance in recent years. Next year brings more of the same, according to analysts, with revenue forecast to grow 10%, in line with its 8.8% annual growth over the past three years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 12% next year. So although Ceridian HCM Holding is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. The consensus price target held steady at US$72.31, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Ceridian HCM Holding going out to 2024, and you can see them free on our platform here..
It might also be worth considering whether Ceridian HCM Holding's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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